I am president of R.A. Prince & Associates, Inc. I consult with the ultra-wealthy and professionals to strategically expand their networks and maximize the value of their relationships. I co-founded Private Wealth magazine where I am executive director.

The Appeal Of Providing Family Office Services

The number of professionals and firms claiming to be multi-family offices or being providers of family office services is growing. Moreover, all indications that the desire to be providers of family office services is going to intensify.

In a survey of 611 financial advisors whose primary offering was investment management and had five or more years continuous experience, about a quarter of them are offering some combination of family office services today. More telling is that about three out of five financial advisors report that they’ll be providing some array of family office services within two years.

“These days, it seems like everyone with a shingle hanging will claim to provide at least some family office services – clear evidence of the exploding and unwavering popularity of the model. While the barriers to entry are low, the hurdles to success remain formidable. Failing to meet established standards for exceptional service in a single area can undermine even long-standing relationships with ultra-wealthy individuals and families,” says Rick Flynn, managing partner of Flynn Family Office.

Topping the list of family office services financial advisors anticipate offering within two years is advanced planning. Seventy percent of the financial advisors expect to be delivering this area of expertise to the affluent. Two out of five are looking to be able to provide the wealthy with financing options. A third of the financial advisors expect to deliver concierge healthcare choices. Less than one in five are looking to be project managers. Fewer than five percent are inclined to provide administrative services.

The respective interest levels are not surprising according to some pundits. “If advisors are serious about cultivating wealthy clients it makes sense to offer advanced planning,” explains Hannah Shaw Grove, executive editor of Private Wealth magazine and an expert on the needs of high-net-worth individuals. “The complex strategies that can mitigate taxes, transition wealth efficiently between generations, and protect assets are all part of the advanced planning domain. It’s where the magic happens and an essential part of sophisticated wealth management.”

Very clearly, for most of the financial advisors to provide these family office services, they’ll need to team up with other professionals. For example, financial advisors are not directly going to deliver concierge medical services. However, they can facilitate the process between the wealthy and appropriate providers.

The objective of being able to deliver family office services is clear. The logic of delivering family office services is very persuasive. In order to build a highly profitable book of business with the affluent the ability to provide family office services can be very strategically as well as financially rewarding.

To begin with, it’s a business model that is very attractive to the affluent. As such, it provides a competitive business development advantage to those professionals that move in this direction and can effectively communicate this to the wealthy. Additionally, providing family office services can enhance the relationship professionals have with their clients. “The family office experience can be extremely rewarding for both the provider and the client,” confirms Grove. “It can improve communications, strengthen relationships and enhance profitability.” Value-added services like concierge healthcare and project management can go a long way to cementing the bond between professional and wealthy clients. Furthermore, many of these services such as advanced planning and financing can generate substantial revenues.

With the extensive movement by many professionals into family office services, some will get it right and others will likely crash and burn. The decision to provide such services needs to be carefully thought through with solid attention paid to the strategic and financial implications.

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